September 23, 2009
EFC Statement on Discharge of Private Loans in Bankruptcy for House Judiciary Subcomittee Hearing
The House Judiciary Subcommittee on Commercial and Administrative Law held a hearing titled, "Hearing on an Undue Hardship? Discharging Educational Debt in Bankruptcy." EFC submitted a statement for the record that read in part, "the private loans offered by nonprofit and state-based lenders are often fixed rate, and frequently feature more attractive terms than the borrower would receive from other financial institutions. Importantly, any revenue that nonprofit loan providers do generate on these loans is used to further their public purpose mission by, e.g., creating and maintaining borrower outreach and financial literacy programs for students, particularly those from under-served and under-represented populations.”
The statement continued, “If non-dischargeability were revoked, it would raise lenders’ financing costs and require them to set-aside greater capital reserves. … Eliminating non-dischargeability protection would force non-profit lenders offering private loans to adjust their offerings by either raising borrower rates, elevating underwriting standards, or both. This would reduce the higher education options available to many students.”
The full statement can be found here.
EFC Statement on Discharge of Private Loans in Bankruptcy for House Judiciary Subcomittee Hearing
The House Judiciary Subcommittee on Commercial and Administrative Law held a hearing titled, "Hearing on an Undue Hardship? Discharging Educational Debt in Bankruptcy." EFC submitted a statement for the record that read in part, "the private loans offered by nonprofit and state-based lenders are often fixed rate, and frequently feature more attractive terms than the borrower would receive from other financial institutions. Importantly, any revenue that nonprofit loan providers do generate on these loans is used to further their public purpose mission by, e.g., creating and maintaining borrower outreach and financial literacy programs for students, particularly those from under-served and under-represented populations.”
The statement continued, “If non-dischargeability were revoked, it would raise lenders’ financing costs and require them to set-aside greater capital reserves. … Eliminating non-dischargeability protection would force non-profit lenders offering private loans to adjust their offerings by either raising borrower rates, elevating underwriting standards, or both. This would reduce the higher education options available to many students.”
The full statement can be found here.
